ASB Bank : Developing an technology-led competitive advantage in an increasingly global banking market

Abstract

This case examines the way in which technological innovation in the form of computerisation and electronic banking enabled the ASB Bank to establish a first-move advantage in these areas over other New Zealand commercial banks. Though not the largest New Zealand bank, the ASB Bank’s purposeful and long-term strategic approach to the opportunities that early computerisation provided in banking, saw the bank not only take a position as a New Zealand leader in the field, being the first to introduce personal electronic banking and personal share trading via computer, but also established an international leadership in this area, being the first bank outside of the United States to introduce real time electronic banking. This case explores these issues. It demonstrates the importance of visionary leadership and the long-term nature of break-through innovation. That is, the developments that the ASB Bank benefited from in the late 1980s and early 1990s, had their seeds over a decade earlier. This is an important facet. It identifies the integral need for management to take a long-term view of innovation. As the ASB Bank, discovered, successful innovation is not produced as the result of a whim or a quick fix approach to market challenges. Instead, it came about as a result of long-term commitment to a strategy along with substantial resource commitment of the bank. The human role is also clear. Key long-serving personnel were essential to this pathway. They became the knowledge carriers in the organisation and contributed much to the will and the capability of the ASB Bank to materialise this technology-led business strategy. Two factors in this case loom large as regards internationalisation issues. First, it is clear that the source of innovation in this case was a willingness to benchmark off international trends. There was no local comparator, nor source of information. The ASB Bank and its management had to remain alert to, and invest in, technology and expertise that was only available internationally, and then skilfully enable its technology-transfer to New Zealand, adapting what they brought to the New Zealand market place and the demands of a regional bank in the midst of a determined programme of organic expansion. Finally, banking, even in a remote Pacific location, is not removed from the trends and impacts of international forces. These are demonstrated at several levels in this case. Perhaps, most significantly, the profound changes that occurred in the New Zealand banking sector in the late 1980s demonstrated, along with the eventual assimilation of the ASB Bank into the Australian Commonwealth Bank, that banking in New Zealand is a global affair, in its innovation, technology, market forces, business strategies, and ownership. Management and leadership must be cognisant of this